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16.01.2025 07:45 AM
What to Pay Attention to on January 16? A Breakdown of Fundamental Events for Beginners

Analysis of Macroeconomic Reports:

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Numerous macroeconomic events are scheduled for Thursday, but none are as critical as those released yesterday. In the UK, reports on GDP and industrial production will be published; however, the market reaction to these may be muted since the GDP report is monthly rather than quarterly. Expectations for strong data from the UK economy are low for both reports. In Germany, a second estimate of December inflation will be released, which is objectively less significant than the initial estimate, likely resulting in a limited market reaction. In the US, data on retail sales and jobless claims will be published. While these reports are moderately significant, they are unlikely to drive major market movements. Therefore, while small bursts of market activity may occur today, strong directional movements are not anticipated.

Analysis of Fundamental Events:

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There are no notable fundamental events scheduled for Thursday, as no speeches by key officials are planned. However, yesterday's US inflation report provides some insight. In the near future, Federal Reserve representatives might indicate that monetary policy easing in 2025 could be less pronounced than the two anticipated cuts of 0.25%. Such developments could trigger a renewed strengthening of the US dollar.

General Conclusions:

On this penultimate trading day of the week, moderate market movements are expected, as no major events are scheduled for today. The most notable reports will include the UK's production and GDP data, as well as US retail sales. Following yesterday's inflation reports, we expect the downward trend for both currency pairs to continue. However, trading decisions today will rely more heavily on technical analysis.

Key Rules for the Trading System:

  1. Signal Strength: The shorter the time it takes for a signal to form (a rebound or breakout), the stronger the signal.
  2. False Signals: If two or more trades near a level result in false signals, subsequent signals from that level should be ignored.
  3. Flat Markets: In flat conditions, pairs may generate many false signals or none at all. It's better to stop trading at the first signs of a flat market.
  4. Trading Hours: Open trades between the start of the European session and the middle of the US session, then manually close all trades.
  5. MACD Signals: On the hourly timeframe, trade MACD signals only during periods of good volatility and a clear trend confirmed by trendlines or trend channels.
  6. Close Levels: If two levels are too close (5–20 pips apart), treat them as a support or resistance zone.
  7. Stop Loss: Set a Stop Loss to breakeven after the price moves 15–20 pips in the desired direction.

Key Chart Elements:

Support and Resistance Levels: These are target levels for opening or closing positions and can also serve as points for placing Take Profit orders.

Red Lines: Channels or trendlines indicating the current trend and the preferred direction for trading.

MACD Indicator (14,22,3): A histogram and signal line used as a supplementary source of trading signals.

Important Events and Reports: Found in the economic calendar, these can heavily influence price movements. Exercise caution or exit the market during their release to avoid sharp reversals.

Forex trading beginners should remember that not every trade will be profitable. Developing a clear strategy and practicing proper money management are essential for long-term trading success.

Paolo Greco,
Analytical expert of InstaForex
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